Orbital Corporation (ASX:OEC) has announced that its 150HFE propulsion system has successfully completed its first flight aboard American Aerospace Technologies Inc.'s (AATI) AiRanger unmanned aircraft.

Following the successful flight, AATI placed a follow-on order for three additional 150HFE propulsion systems, bringing total customer orders to eight units valued at more than US$750,000. Orbital will ship the three additional propulsion systems this week to support the next phase of the AiRanger development program.

CEO Stephen Pearce said the successful flight validates the integration of Orbital's propulsion technology into the AiRanger platform and advances AATI's flight testing and fleet expansion program.

"We look for customers that have the potential to build and operate meaningful fleets over the long term, and AATI is a strong example of that strategy. The company's commercial BVLOS operating approvals, operational experience and focus on long-endurance missions create a meaningful competitive advantage as it pursues opportunities to support US Government UAS programs," Mr Pearce said.

"For Orbital, the successful first flight and follow-on order represent more than an additional engine sale. As AATI continues to grow its fleet, we see opportunities for further propulsion system orders and, ultimately, the transition of those aircraft into our Power by the Hour operating model. That combination of upfront hardware sales and long-term recurring service revenue is what makes relationships like this strategically important for Orbital."

AATI is a US-based developer and operator of long-endurance unmanned aircraft, providing aerial intelligence, surveillance, and inspection services to government and commercial customers. Its flagship AiRanger platform operates under commercial Beyond Visual Line of Sight (BVLOS) approvals, which the company describes as a significant competitive advantage in long-endurance unmanned operations. BVLOS approvals allow unmanned aircraft to be operated beyond the pilot's direct visual range, an important capability for wide-area surveillance, inspection, and other long-duration missions.

AATI is positioning the AiRanger platform for a range of government and commercial opportunities that could drive fleet expansion over time.

As AATI expands its operational footprint, Orbital believes there is potential for additional propulsion system orders alongside recurring aftermarket revenue through the company's Power by the Hour (PBH) operating model. The PBH model is designed to generate recurring revenue through engine maintenance, overhaul, replacement, and ongoing performance support based on engine operating hours, complementing Orbital's propulsion system sales.

As customer fleets expand and transition into operational service, PBH has the potential to create a long-term recurring revenue stream alongside future propulsion system orders.

OEC shares rose 14.8% to 15.5¢, with a market capitalisation of $24.21 million.